Applied Materials Plummets 2.6% Amid Sector Turbulence: What's Fueling the Selloff?

Summary
• Applied Materials (AMAT) trades at $178.00, down 2.63% intraday with a range of $177.4–$183.2
• Sector peers like Lam Research (LRCX) also decline, signaling broader semiconductor industry pressures
• Analysts highlight mixed fundamentals, U.S. tariff risks, and AI-driven sector divergence as key themes

Applied Materials faces a sharp intraday selloff amid a volatile semiconductor sector backdrop. The stock’s 2.63% drop to $178.00 reflects a confluence of earnings uncertainty, regulatory headwinds, and sector-wide shifts toward AI-focused players. With institutional inflows and technical indicators pointing to bearish momentum, traders are recalibrating positions ahead of AMAT’s Q3 earnings on August 14.

Sector-Wide Selloff and Earnings Jitters Weigh on AMAT
The decline in AMAT is driven by a combination of sector-specific and company-specific factors. Recent news highlights intensifying competition from NVIDIA and mixed analyst ratings (average 3.00), while U.S. tariff risks threaten global supply chains. Additionally, AMAT’s R&D investments, though rising, face scrutiny over their ability to deliver near-term returns. The stock’s bearish engulfing pattern and oversold RSI (29.31) reinforce technical caution, aligning with broader semiconductor sector weakness as AI-driven demand shifts favor select players.

Semiconductor Sector Volatility Intensifies as Lam Research Trails AMAT
The semiconductor sector is experiencing divergent momentum, with AI-focused players outperforming traditional manufacturing equipment firms. Lam Research (LRCX), AMAT’s sector leader, also declines 2.14% intraday, reflecting shared pressures from slowing consumer electronics demand and earnings divergence. While AMAT’s 52-week high of $215.7 remains distant, the sector’s exposure to U.S.-China trade tensions and AI-driven capital allocation underscores a fragile outlook for non-core players.

Options Playbook: High-Leverage Puts and Calls for AMAT's Volatile Outlook
• 200-day average: 170.26 (below) • RSI: 29.31 (oversold) • MACD: 0.38 (bearish) • Bollinger Bands: 178.99–202.21 (bearish bias)

Technical indicators suggest AMAT is in a short-term bearish trend, with key support at $178.99 (lower Bollinger Band) and resistance at $182.89 (30D support). The 2.63% intraday drop aligns with a 52-week low approach, making high-leverage options attractive for directional bets. Below are two top options from the chain:

• AMAT20250815P162.5 (Put): Strike $162.5, Expiry 8/15, IV 55.27%, Leverage 124.63%, Delta -0.15, Theta -0.0965, Gamma 0.01385, Turnover 168,999
- IV: High volatility implies potential for large moves
- LVR: 124.63% suggests aggressive downside exposure
- Delta: -0.15 indicates moderate sensitivity to price drops
- Theta: -0.0965 shows moderate time decay
- Gamma: 0.01385 implies sensitivity to price acceleration
- Turnover: 168,999 confirms liquidity
- Payoff (5% downside to $169.1): $16.60 profit per contract
- This put offers high leverage for a bearish scenario, with liquidity and moderate time decay supporting short-term positioning.

• AMAT20250815C165 (Call): Strike $165, Expiry 8/15, IV 87.21%, Leverage 9.70%, Delta 0.72, Theta -0.726, Gamma 0.0124, Turnover 0
- IV: 87.21% signals extreme volatility, ideal for high-risk, high-reward plays
- LVR: 9.70% suggests limited upside but low cost
- Delta: 0.72 indicates strong sensitivity to price rallies
- Theta: -0.726 shows rapid time decay, favoring quick moves
- Gamma: 0.0124 implies limited sensitivity to price acceleration
- Turnover: 0 warns of illiquidity
- Payoff (5% downside to $169.1): $4.10 profit per contract
- This call is speculative, suited for aggressive bulls expecting a sharp rebound post-earnings.

Hook: If $178.99 breaks, AMAT20250815P162.5 offers bearish potential; bulls may target a bounce above $182.89 with AMAT20250815C165.

Backtest Applied Materials Stock Performance
After a -3% intraday plunge, Applied Materials (AMAT) exhibited a resilient rebound, with a 2.5% rise in the subsequent trading session, driven by a 4.3% surge in buy orders. This recovery was tempered by a 2.1% decline in sell orders, highlighting investor confidence in the company's fundamentals despite the initial shock.

Act Now: AMAT at Pivotal Crossroads—Bullish or Bearish Bet?
Applied Materials stands at a critical juncture as sector-wide pressures and earnings uncertainty collide. The 2.63% intraday drop, coupled with a bearish engulfing pattern and oversold RSI, signals a fragile technical outlook. However, institutional inflows (50.71% ratio) and a 52-week low near $123.74 suggest potential for a rebound. Traders should monitor the $178.99 support level and AMAT’s August 14 earnings report for directional clarity. Meanwhile, sector leader Lam Research (LRCX) declines 2.14%, underscoring the need for caution. Watch for $178.99 breakdown or earnings-driven reversal.